Recent ABACE Conference Spotlights International Joint Ventures
An accelerating trend toward international cooperation could give business aviation in China the lift it needs to finally get off the ground.
That was the dominant theme of last week’s Asian Business Aviation Conference and Exhibition (ABACE). Held at Shanghai’s Hongqiao Airport from April 16 to 18, the 2013 conference attracted 80 U.S. businesses, underscoring the uptick in trade between the two countries.
According to Aviation International News, ABACE attendance in general was up 20 percent over the 2012 conference, with this year’s 180 exhibitors representing a 15 percent bump over 2012. Even the 35 aircraft on display were a 25 percent increase over last year’s fleet of 27.
Several global firms used the conference as a platform to announce new sales and initiatives, including Beechcraft’s recent aircraft order from the Jiutian International Flight Academy in Qingdao. Fractional-ownership titan NetJets confirmed that NetJets China would begin operations in first-quarter 2014, while homegrown Beijing competitor Deer Jet announced a new “Time Share” program offering shares in two Gulfstream jets.
The past year has seen an increased China presence for such international companies as Bombardier, which opened an office in Shanghai; Dassault Falcon, which opened customer services office in Beijing and Shanghai; and Gulfstream, which opened a service center in Beijing last fall.
International air charter companies, such as U.K.-based Hunt & Palmer, are also becoming more active on the mainland, generally in collaboration with a strong domestic or Hong Kong partner. Challenges in this field include a cumbersome flight permitting process that undercuts the flexibility that makes chartering attractive, and a shortage of craft available for charter – for Chinese jet owners, letting strangers charter your plane as a way of defraying costs is still an unfamiliar concept. Although “we’re now seeing a more stable period of growth, a new aviation culture in China,” one charter professional told Business Jet Traveler, it will be “another five years easily before there’s a strong charter market.”
At ABACE, Cessna signaled a hefty commitment to growth in China with its announcement of a joint venture with China Aviation Industry General Aircraft (CAIGA), which will see China-based production of business jets for the domestic market. A second Cessna venture with Aviation Industry Corporation of China (AVIC) will produce utility turboprop planes. “The construction of facilities is complete and we expect tooling and equipment to be in place in Shijiazhuang by June and in Zhuhai before the end of the year,” company spokesman William Schultz said at ABACE. Government approval for the Cessna operations, however, could slow the process.
That’s one indication of the challenges that, despite increasing international interest, continue to weigh on business aviation in China. Chief among them is the continuing constraints on civilian use of government-controlled low-altitude airspace – a situation that is currently under review and likely to change, at least to some degree, over the next few years. A shortage of trained pilots is another obstacle, along with the lack of adequate aviation infrastructure to support a burgeoning business fleet.
At ABACE, Jing Ming, vice president of the Shanghai Airport Authority, addressed the infrastructure issue, announcing plans for a new hangar at Shanghai’s Hongqiao Airport and a new fixed base operator (FBO) for fueling and maintenance at Pudong Airport. He also announced a project to increase the capacity for air traffic control.
High import taxes on business jets and high domestic operating costs are other factors shaping the China market, but aircraft’s importance as a bling-proof status symbol cannot be discounted. Among Chinese private jet owners, the preference has largely been for large, big-cabin aircraft – factors like fuel economy and travel range have generally been less important. That could change as the mainland’s business jet market matures. “As it gets easier to operate planes inside China, as they maybe ease their taxes, as you get access to more pilots,” one global aircraft broker told Aviation International News, “it will help smaller planes down the line.”